Experts prescribe options for implementation of 2017 budget

Caution against maximum borrowing, others
As the Federal Government plans to finance a deficit of N2.36 trillion for the 2017 budget, financial experts have stressed the need to exercise maximum caution on the borrowing plan, urging government to ensure that that proceeds are not deployed into recurrent expenditure.

Experts, who gathered at 2017 Budget Seminar, organised by the Securities and Exchange Commission (SEC), in Lagos, at the weekend, maintained that for Nigeria to witness a reasonable level of stability, government must resolve the conflict between its fiscal and monetary policies.

According to them, greater caution in borrowing, with good synchronisation of the two policies would result in resolution of structural deficiencies in the country and accelerate economic growth.

The Federal Government has proposed a budget of about N7.3 trillion for 2017 with an estimated N4.94trillion of aggregate revenue available to fund the budget.

The fiscal plan will result in a deficit of N2.36 trillion for 2017, expected to be financed mainly by borrowing. It is the intention of the Federal Government to source about N1.067 trillion of these deficits from external sources while N1.254 trillion will be sourced by borrowing from the domestic market.

Specifically, the Chief Executive Officer, Quest Advisory Services Limited, Bayo Rotimi, said the 2016 deficits were incurred because revenue expectations were not achieved, adding that government should monitor and control its debt to revenue position.

“There is need to exercise a bit of caution on borrowing. The amount is a significant sum; we should ensure that the proceeds of borrowing do not go into recurrent expenditure. We need to put structures in place.

“Again, there must be greater coordination between the regulators; the SEC, NAICOM, CBN and PENCOM because they hold the bulk of government papers and pool of fund. While SEC is trying to deepen the market, it must pull other regulators along for proper coordination. The PENCOM assets must go into critical sectors of the economy to drive growth.”

The Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, urged government to opt for privatisation to boost the economy, noting that government lacked the capacity to manage assets.
He, however, noted that better results would be achieve, if government made public what the assets are, execution timeline and the specific infrastructure projects in exact locations across the country that the money would be used to finance.

Chukwu, who argued that no investor would make investments in an economy that is shrouded in obscurity, urged government to reverse the uncertainty in the foreign exchange market.

“There has to be aggressions in the whole process. A robust privatisation timeline and timetable must be made public. There must be certainty in the foreign exchange. There must be a legal frame work that would involve the private sectors in infrastructure development.”

The, Managing Director of INVESTMENT ONE Vencap, Dr. Ore Sofekun stressed the need to promote ‘made in Nigeria’ goods in order to promote the SMEs and bring stability to the economy.

“We need to patronise ‘Made in Nigeria’ goods, we need to promote SMEs. They need access to the market. Government must create intervention fund and ensure that all the parts of the business of SMEs are financed both equipment and working capital.

The Head, Economic Research and Policy Management Division, SEC, Dr Afolabi Olowookere, said the budget deficit of N2.36 trillion will have negative and significant affect the market equities, noting that if the foreign exchange policy is not well managed, it could affect companies’ operations and performance in 2017.